Outward FDI and company performance in CEECs

Joze Damijan, Crt Kostevc and Matija Rojec

No 381, Working Paper Series in Economics and Institutions of Innovation from Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies

Abstract: Using a large sample of micro data we investigate what kind of CEECs-9 (Bulgaria, Czech Republic, Estonia, Hungary, Latvia, Poland, Romania, Slovakia and Slovenia) firms tend to invest abroad, and what is the impact of outward FDI on their productivity. We find that firms with outward FDI tend to be larger and more productive, i.e. the best firms tend to self-select into outward FDI. There is also a positive effect of outward FDI on productivity growth of investing firms from CEECs, but this effect is driven exclusively by the subsamples of Czech and Romanian firms, while the impact in other countries is substantially less pronounced. In addition, the positive effect does not appear to be long lasting as it is only statistically significant a year after the investment was made, while employing longer lags yielded positive but insignificant correlations. We also find the heterogeneity of effects by different host-country markets, i.e. investments by CEECs firms into either Western European or other CEECs yielded an above average effect on productivity growth of investing firms, investments into other parts of Europe did not significantly impact the growth of productivity, while North American subsidiaries were even negatively correlated with productivity growth.

Keywords: FDI; cross-country comparisons; emerging economies; productivity growth; micro-data (search for similar items in EconPapers)
JEL-codes: C30 F23 O47 O57 (search for similar items in EconPapers)
Pages: 26 pages
Date: 2014-10-24
New Economics Papers: this item is included in nep-eff, nep-eur, nep-int and nep-tra
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:hhs:cesisp:0381

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